‘I think hospitals in Ontario really do have to pay attention to this case and its implications,’ says Elyse Sunshine.
‘I think hospitals in Ontario really do have to pay attention to this case and its implications,’ says Elyse Sunshine.
As the flu season approaches, hospitals in Ontario have a new decision to ponder from an arbitrator who says a policy of “vaccine or mask” for nurses was contrary to the Ontario Nurses’ Association collective agreement because it was unreasonable.
Published in Latest News
Monday, 03 August 2015 08:00

Controversy dogs family med-arb

Illustration: Jeannie Phan
Illustration: Jeannie Phan
Gary Joseph says some years ago, he dodged a legal bullet. He was sitting in a breakout room with a family law client. A mediator-arbitrator would come in to talk to them before going to another room to speak to the other party in a process similar to shuttle diplomacy. “The mediator came into our room and he began talking about the evidence that we have and our expert report and [started] making some negative comments about the expertise of our expert and some other things that our expert did,” Joseph recalls. “When he left the room, my client turned to me with just daggers in his or her eyes and said, ‘What have you done to me? How could this person possibly be fair to me after telling me that my expert report has 16 different holes in it?’”
Published in Features
Monday, 08 April 2013 08:00

Hot competition - part 2

Hot competition - part 2This article is a continuation of 'Hot competition' from the April 2013 issue of Canadian Lawyer magazine.
Click here to read part 1.
Published in Boutique Firm Rankings
Monday, 25 March 2013 11:22

Bracing for the pension time bomb

Photo: Pierre Charbonneau
Photo: Pierre Charbonneau
Fred Headon and the in-house labour law team at Air Canada have learned more about pension law in the last 18 months than most lawyers will learn in a career. Over the last decade, Canada’s national airline has been steadily hit with a series of economic hardships — from the New York terrorist attacks in 2001 to the SARS crisis in 2003 and the credit crunch in 2008 — which decimated air travel and led to a series of restructurings.
Published in InHouse Cover Story
Monday, 25 February 2013 07:54

The pros & cons of . . .

Practising in Regina, elder law, in southern Ontario, arbitration
Published in Issue Archive
Monday, 15 October 2012 09:00

The adventures of a first-year in London

The adventures of a first-year in LondonI drank an alarming amount of tea during my first year as a lawyer — two cups in the morning, sometimes three in the afternoon. I went from never having had a cup of tea in 28 years to developing a serious addiction. This was due to spending my first year as a lawyer somewhat differently than most of my 2011 call counterparts — I spent the year in London, England working for barristers as a Fox Scholar.
Published in Web exclusive content
An arbitration board has upheld the decision by the Calgary Fire Department to temporarily suspend and demote a captain. Photo: Shutterstock
An arbitration board has upheld the decision by the Calgary Fire Department to temporarily suspend and demote a captain. Photo: Shutterstock
An arbitration board has upheld the decision by the Calgary Fire Department to temporarily suspend and demote a captain after he used an expletive to describe female members of the fire crew.
Published in Latest News
Monday, 03 September 2012 09:00

The problem is enforcement

Illustration: Oleg Portnoy
Illustration: Oleg Portnoy
In an attempt to further establish its reputation as a leading international arbitration body, the China International Economic and Trade Arbitration Commission revised its rules on May 1, 2012 to be more in line with respected organizations like the International Chamber of Commerce. With Canadian imports and exports to China rising every year ($44.5 billion and $13.2 billion respectively in 2010), will these new rules do anything to solve the problem foreign companies have in enforcing their arbitration awards in China? The short answer is not really.
Published in Departments
Thursday, 14 June 2012 09:04

Sidebar: Managing leases in a merger

Companies must take care not to let leasing considerations slip through the cracks of a merger deal, according to a Toronto real estate lawyer.
In transactions that proceed by way of a stock deal, Stikeman Elliott LLP partner Mario Paura says the buyer understandably focuses its attention on active leases and currently occupied premises. But that’s only part of the picture in a full assessment of the risks assumed by the purchaser in the deal, he says. “It’s easy to forget about the ones that have been disposed of by the target, whether by assignment or sublet,” Paura says. “But unless the landlord has released that entity of its obligations, it continues to be liable for the duration of the term, and depending on the lease language, it could potentially be liable beyond that to the extent that the lease gets renewed. You need to flush out as part of the due diligence process which stores used to be occupied whether the leases have been properly surrendered or terminated.”
Another potential stumbling block comes in the form of landlord consents. Very few leases allow changes of control to go through without landlord consent, and some could trigger extra responsibilities to the buyer or benefits to the landlord.
“The rent may increase as a result of the transaction, or landlords could have a right to terminate, or to demand the tenant fix up the place. Those are all things going into transactions you need to inform yourself of before you approach the landlord,” Paura says.
Often landlords will be constrained by a clause in the lease that prevents them from unreasonably withholding consent, but in the hot retail sector in particular, consent is not something you can take for granted, according to Paura.
“Retail has been a very hot market in the last couple of years. Rents have been rising very steadily over the last decade, and there are lots of foreign retailers looking to come to Canada. So landlords certainly have no problem, to the extent they have smaller independent chains, trying to find reasons to make room for these newcomers,” he says. “In an upswing market, if they’ve signed unfavourable leases, they may be willing to get their space back and re-let it out.”
Paura’s firm was at the heart of the deal that brought one of those foreign players into the Canadian market. Stikemans represented the Hudson’s Bay Co. in its sale of almost 200 Zellers leases to U.S. retail giant Target. “That has been a revolutionary transaction in terms of increasing the value of those shopping centres. With a significant attractive anchor tenant, it’s going to revitalize them, and there will certainly be opportunities in terms of redevelopment and rising rents,” Paura says.
Ironically, the $1.8-billion deal’s unusual structure meant many of the normal concerns in lease transactions were not in play. Landlord consents were not an issue because it was virtually inconceivable that landlords would object to Target as a tenant.
“Any shopping centre owner who was able to attract Target would win pretty much regardless of the rent that Target was paying them,” says Doug Klaassen, Stikeman’s real estate partner on the Zellers deal team.
Instead, the deal was engineered to maximize Target’s leverage in negotiations with individual landlords. Instead of purchasing Zellers’ entire portfolio of 275 leases, the deal closed in January 2011 with Target committed to buy up to 220 leases in the following eight months. That meant landlords could not be certain that their location would make the final cut, and Target was given some wiggle room to secure better terms during the selection process.
Representations and warranties from HBC were also at a bare minimum, while Target was prepared to swallow any ongoing liabilities owed by Zellers under the leases it selected.
“The bottom line was that Target’s covenant is good enough. In many cases we were released, but where it didn’t happen, Target is indemnifying us, and it wasn’t really a concern on that simply because they have an investment grade rating in the U.S.,” says Klaassen, who adds that the absence of a third-party lender allowed both parties to get more creative in the structuring of the deal.
Selected leases were immediately subleased back to Zellers by Target, with the U.S. retailer given an option to terminate with notice, allowing them to complete a staggered takeover of stores in the next couple of years.
Companies must take care not to let leasing considerations slip through the cracks of a merger deal, according to a Toronto real estate lawyer.
Published in Issue Archive
Thursday, 14 June 2012 09:04

Choosing arbitration to mend leasing woes

The relationship between a landlord and tenant can get just as fraught with ups and downs as any long-term union.
With commercial tenancy terms typically measured in five-year blocks, and renewal options that can easily double or triple that length, parties are going to have to get used to living with one another.
Without a reliable way to predict future market conditions, many leases provide for a mid-term rent review, but even when the price is fixed for the first five years, that still leaves a big decision for the following half-decade.
“You have a deal between two parties where they’re committed to a future relationship, but the cost hasn’t been determined. That can be problematic, so really it’s natural there’s going to be issues,” says B.C. lawyer Brian Wallace, who runs an arbitration practice with offices in Victoria and Vancouver.
Landlords and tenants are increasingly turning to arbitrators like Wallace and Toronto-based David McCutcheon to settle these inevitable disputes, attracted by the confidentiality and speed of the process. “Normally, the parties select an arbitrator because they have industry knowledge and expertise that you might not get if you’re in front of a judge, which means they don’t take a lot of time to grasp and resolve those issues,” says Fraser Milner Casgrain LLP partner and dispute resolution specialist McCutcheon. “It’s also procedurally a lot more efficient, I think. I’ve had some on major items that last for six months, which is considerably less than you would get in the courts. Everything is case managed by the arbitrator, so you don’t have to wait for a motion date. You just phone up the arbitrator and say I want to have a motion heard at 9:30 a.m. on some morning, the arbitrator books the time, and you argue the matter.”
Kenneth Glasner, who works as a mediator in Vancouver, says the move to arbitrate has been driven by in-house counsel seeking relief from the spiraling expense and confrontational atmosphere that frequently come with litigation. He compares the landlord-tenant relationship to that between employers and unions. “It’s a long-term relationship and they can’t just dismiss each other, because each has got such a substantial investment in the other,” he says.
According to Glasner, both sides will benefit from drafting an arbitration clause at the time the lease comes into effect, rather than waiting until a dispute has arisen.
“After you hit the dispute, they can certainly still go to arbitration, but there’s often already a lot of animosity at that point. Get it in there at the beginning,” he says.
And while arbitration clauses are becoming almost standard as part of the commercial lease, Glasner says that parties are not always getting the best out of the process. “All too often what happens is the parties will spend a month or two negotiating a commercial lease, and then at the very end, someone will spend two minutes, and say ‘let’s throw in an arbitration clause’ without thinking through the effects of that clause,” he says.
A poorly worded clause can cause problems and delays right from the outset of arbitration, by failing to reflect the wishes of the parties or take into consideration the peculiarities of an individual lease. “Arbitration clauses must be designed uniquely for contract itself. Generally there’s no such thing as a good standard clause,” he says.
Harvey Haber, a senior partner at Toronto’s Goldman Sloan Nash and Haber LLP, says a vague and overly broad agreement to arbitrate any dispute under the lease can “create absolute havoc,” noting that the dollar value and complexity of many disputes may not warrant arbitration and may not be the most efficient mechanism for settling all disputes that may arise between landlords and tenants. “Any provision of the lease could have objections, all of which could give rise to arbitration. Maybe you’re picking a panel of three and you could be talking a fortune already for a relatively minor dispute,” Haber says.
According to Glasner, parties should also give careful consideration to the powers they will hand to the arbitrator in order to keep things moving along, as well as the ability to impose penalties for misbehaviour. “Give the arbitrator powers to deal with games that can be played by one or other of the parties,” he says.
For example, in B.C., one party is unable to move for dismissal of the arbitration for failure to prosecute the claim when there has been a large delay, unless the arbitration agreement specifically provides for that right.
Milton Davis, the managing partner of Davis Moldaver LLP in Toronto, is still scarred by one of his earliest arbitration experiences. As counsel to one of the parties in an eight-year slog, he says it was sometimes difficult to distinguish the case from regular litigation through the courts. “The wound from having been involved in that is something that I won’t forget ever,” says Davis.
Some of the procedures associated with litigation can easily be cut out of many arbitrations, he says. For example, discovery of documents is not always necessary, while oral examination of witnesses can be eliminated in favour of written evidence, with a time-limited cross-examination.
Realizing and exploiting the power they have over their own process is one way parties can cut the costs and time they invest in an arbitration, according to Gerry Ghikas, a litigation and arbitration partner in the Vancouver office of Borden Ladner Gervais LLP. “The parties have an opportunity to write their own rules. If they want, it can be done quick and dirty,” Ghikas says, adding that he’s done entire arbitrations where his total fees come in at not much over $10,000.
That flexibility can be particularly valuable in more straightforward disputes, which could involve smaller retail premises, landlord and tenant appraisals without a gulf between them, or unchallenged assumptions over whether the valuation should be based on the original unimproved space or its current condition. “You don’t want to spend more money resolving the issue than is at stake. Each side has the same interest in that,” Ghikas says.
Wallace points out that arbitration also provides parties with a chance to experiment with different styles of dispute resolution. In one, known as baseball arbitration, both sides present a single best offer and the arbitrator is only allowed to select one as the winner. “There’s a great benefit to that because it really narrows the issues and forces parties to be realistic in what they propose. You know you can’t just hope to fool the arbitrator, because if they don’t fall for it, the risks are too high,” he says.
Glasner also favours flexible rules for examination of experts, including the use of hot-tubbing, which places experts retained by opposing sides in the witness box at the same time, encouraging them to identify areas they agree on and isolate the matters on which they disagree. “All of a sudden, the expert can’t be a prima donna. They’ve got a colleague sitting right there and they can’t get away from it. They have to remember they’re there not for the benefit of the party that retained them, but for the benefit of the decision-maker,” Glasner says.
Another simple way to cut costs and time, according to Haber, is by cutting the number of arbitrators. He says arbitration clauses in commercial leases often provide for a three-person panel, with each side proposing one name, and the two nominees selecting a chair. An extremely complex dispute may call for a larger panel, but Haber says they are the exception. “The difficulty with that is it is horrendously expensive. You’ve got the cost of three arbitrators, where you could be talking $30,000 or $40,000, then the cost of two attorneys, two appraisers, and the whole thing could cost you $60,000,” he says. “It also makes scheduling very difficult, which is going to delay things.”
Illustration: Kim Rosen
Illustration: Kim Rosen
The relationship between a landlord and tenant can get just as fraught with ups and downs as any long-term union.
Published in Issue Archive

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